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Your purchase probably comes with other protections.

Main points:

  • Extended warranties don’t cover anything that could go wrong with the purchase, and they’re expensive to handle.
  • Your purchase likely comes with a manufacturer’s warranty, and the retailer you buy it from may also stand behind it.
  • The best credit cards also offer purchase protection.

I quote the classic American cartoon character Homer J. Simpson, “Extended Warranty! How can I lose?” Well, buying with an extended warranty is likely to save you money as well as your precious time.

If you’re buying a new home appliance or consumer electronics product, such as a computer or smartphone, you’ll likely be offered an extended warranty at an additional cost. Extended warranties are available for many products, but these are the most common situations that require you to purchase one. Even shopping on Amazon doesn’t keep you safe from this offer. I regularly get asked about buying one during the checkout process on Amazon (and a number of products, most recently on the new power adapter I bought for my external hard drive). Extended warranties differ from the manufacturer’s existing warranty (more on that below) by offering to cover your purchase against breakage or other damage for a longer period of time. Sounds good, right? Well, not necessarily.

1. Extended warranties are expensive

Warranty Week’s newsletter in 2017 noted that extended warranties were then a $40 billion annual business. That’s a lot of money to spend to protect newly manufactured products, most of which will undoubtedly work well for at least the first part of their useful life (and probably for the period that the product is covered by warranty. ) If you already have you want to buy a new clothes dryer, do you really want to pay extra for a service you may not need? Plus, the cost of just paying for the repair is probably less than the warranty will pay you, according to Consumer Reports.

2. Extended warranty coverage may not be applicable in all situations

Extended warranties don’t cover everything that could go wrong with your new purchase, and if you’re considering buying one, it’s a good idea to really dig into the fine print to see exactly what it will cover. As noted by the Federal Trade Commission, extended warranties may also have specific storage or care requirements for the product, and if they break, the company may blame you for improper use or maintenance and then deny coverage.

3. Your purchase probably comes with a manufacturer’s warranty

Most appliances and electronics, small and large, automatically come with at least a limited manufacturer’s warranty. It seems like every toaster or vacuum I buy has warranty information right on the box, or sometimes printed on the back of the user manual. According to Consumer Reports, these warranties typically last about 90 days, and even after that, you’re still out of luck. Customer service is good at honoring warranty expirations, and many companies like the boost this move can give their brand (especially in these days of social media, where you can tweet at the manufacturer directly in a public space).

4. Your credit card can protect you

The final reason for not needing an extended warranty has to do with the payment method you used for the purchase. If you used a credit card for this, you may have an additional guarantee through the card issuer. Credit card protection often goes beyond the manufacturer’s warranty, so read the fine print of these cardholder benefits, which can cover a broken, stolen or other mishap. The best credit cards out there come with great benefits that you may not be aware of, and it’s worth using them when you can to save money and headaches.

5. The retailer may take back the product

If all else fails, if it’s been a short time since you bought the product and it’s spoiled, you may even be able to get your money back from the retailer that sold it to you. Return policies vary, but most retailers will stand behind the products they sell. Costco is an example of one of these standing retailers.

Still thinking about that extended warranty? In addition to the above reasons you probably don’t need it, remember that you can save the money you would have spent on it in your emergency fund if your new furnace or dryer needs repairs. Otherwise, using the right credit card to purchase a reputable product from a good retailer can go a long way toward not needing an extended warranty.

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